Finance leaders discuss how to stimulate the $1 trillion needed to address climate change

23 July 2011

NEW YORK: On July 20, The Climate Group and Theodore Roosevelt IV of Barclays Capital hosted a roundtable dialogue with Andrew Steer, Special Envoy for Climate Change at the World Bank with senior members of the financial sector, to discuss how public sector funding could be used to stimulate the nearly $1 trillion of private sector investment needed to address climate change worldwide.

Participating organizations included: Barclays Capital, Bloomberg New Energy Finance, BNY Mellon, Citi, Deutsche Bank, Goldman Sachs, MEAG New York Corporation, Morgan Stanley and Sustainable Development Capital

Andrew Steer opened the meeting by framing the challenge, asking the attendees how a relatively small amount of public funds, such as the World Bank supported Climate Investment Funds and the nascent Global Green Fund, could be deployed to leverage much greater amounts of private sector investment. 

He said the outcomes of the meeting would feed into the World Bank’s paper on how to engage the private sector that was requested by the G20.

Acknowledging the challenges that the private sector currently face investing in some developing countries, such as identifying viable projects and accounting for political risks, participants coalesced around a number of practical suggestions including:

  • Using public funds to remove existing risks and improve the investment climate in developing countries (e.g. guaranteeing existing public policy incentives and power purchase agreements);
  • Developing “bankable” models for energy investments in developing countries (e.g. through larger regional integration and small-scale distributed generation models); and
  • Leveraging the experience of organizations like the IFC to help identify viable projects.

Amy Davidsen, US Executive Director, The Climate Group said: “There is currently a major gap between the amount of investment that is needed and the amount of investment that is currently available to fight climate change. Therefore, public funds must act as a catalyst for a much larger amount of private finance, as opposed to merely providing capital for a limited number of projects. We look to the leaders in this room to figure out how to meet that challenge and make sure that successful models are deployed around the world.”

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